IRS official calls decision to use planted question on scandal 'incredibly bad idea'

The outgoing IRS commissioner expressed regret Tuesday for a decision to use a planted question to go public with the agency's practice of targeting conservative groups, calling the move "an incredibly bad idea."

Steven Miller, appearing on the Hill for a second hearing in two weeks on the scandal, acknowledged that the agency was trying to get ahead of a damning investigative report at the time. As was confirmed over the weekend, he admitted the agency had a question planted at a conference two Fridays ago -- a senior IRS official, in response to the question, then confessed to a long-running program that singled out conservative groups for additional scrutiny.

"Obviously the entire thing was an incredibly bad idea," Miller said.

Miller explained that the agency had been trying to brief lawmakers on the Hill, in advance of the release of the inspector general report. But that "did not work out," he said, so they used the planted question.

"The report was coming, we knew that," he told the Senate Finance Committee.

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The issue raised more questions for lawmakers about the way in which the agency addressed public concerns about the screening program. Sen. Orrin Hatch, R-Utah, criticized the IRS for using the planted question to come forward, suggesting it compounded the problems with the agency's response.

In a tense round of questioning, Hatch also asked why neither Miller nor former IRS Commissioner Douglas Shulman acknowledged the program before -- Congress had been asking about the allegations since 2012.

Shulman claimed he did not have a "full set of facts," but said he was aware in the spring of 2012 there was an internal list that included the term "Tea Party." That list was used as the basis for singling out some groups applying for tax-exempt status. Shulman also said he did not know how the controversial program started, adding that lower-level officials "should have run up the chain" their knowledge about the program earlier.

"You should have corrected the record, and you should have done it long before today," Hatch said.

He also accused Miller of lying when he didn't acknowledge the program in letters to Congress last year, despite being aware of it.

"That's a lie by omission, there's no question about that in my mind," Hatch said.

Miller, as he claimed last week, said he "did not lie."

Shulman got into another tense exchange with Republican Sen. John Cornyn, when the former commissioner refused to apologize for the practice which started under his leadership.

Shulman said he was "deeply, deeply saddened" by what happened and acknowledged it started "on my watch." But he said he's not "personally responsible" for creating the screening list.

Cornyn later said that the response was "an insult."

The hearing followed one by the House oversight committee last week; they are likely just the first of several as committees begin to investigate the IRS program.

"The IRS abandoned good judgment and lost the public's trust," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, at the start of Tuesday's hearing.

Hatch, the top Republican on the panel, alleged that officials didn't decide to come clean until the investigative report was imminent and "their hand was forced."

"Were they simply holding out until after the election?" Hatch asked.

It was the first time lawmakers were able to question Shulman, the man who ran the IRS when agents were improperly targeting Tea Party groups.

The Senate Finance Committee, which has launched a bipartisan probe, was also hearing from Inspector General J. Russell George.

Shulman faced scrutiny, after having told a House committee in March 2012 there was "absolutely no targeting" by the IRS of conservative organizations. Shulman, who was appointed by President George W. Bush, left the IRS in November when his five-year term ended.

The hearing comes after White House Press Secretary Jay Carney said Monday that the president's counsel was told on April 24 about the preliminary findings of an IRS audit that showed tax officials unfairly targeted Tea Party groups. Senior legal counsel Kathryn Ruemmler was told about the audit on April 24, Carney said Monday. She then told Denis McDonough, Obama's chief of staff and other senior officials about the investigation.

"It was the judgment of counsel this is not a matter she should convey to the president," Carney said.

Carney also said while Ruemmler knew the subject of the investigation and potential findings, they were not given a draft of the report and understood details could change.

Ahead of the hearing, Baucus and Hatch sent a letter to the IRS Monday, asking for an explanation. The letter included 41 separate requests for information. They gave the IRS until May 31 to respond.

The two senators said the IRS had not been forthcoming about the issue in the past.

"Targeting applicants for tax-exempt status using political labels threatens to undermine the public's trust in the IRS," Baucus and Hatch wrote. "Lack of candor in advising the Senate of this practice is equally troubling."

For more than a year, from 2011 through the 2012 election, members of Congress repeatedly asked Shulman about complaints from Tea Party groups that they were being harassed by the IRS.

Shulman's responses, usually relayed by a deputy, did not acknowledge that agents had ever targeted Tea Party groups for special scrutiny. At a congressional hearing March 22, 2012, Shulman was adamant in his denials.

"There's absolutely no targeting. This is the kind of back and forth that happens to people" who apply for tax-exempt status, Shulman said at the House Ways and Means subcommittee hearing.

The IRS has said Shulman did not know about the targeting at the time of the hearing.

The agency's inspector general says he told Shulman on May 30, 2012, that his office was auditing the way applications for tax-exempt status were being handled, in part because of complaints from conservative groups. However, the inspector general said he did not reveal the results of his investigation.

The Associated Press contributed to this report.